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Goldman paying 3.15 BILLION to settle stinky mortgage claims

I guess I just don't understand the need to pin this on individuals on the lower end of the totem pole, while the upper half of decision makers will undoubtedly get off clean and the industry itself is simply reapplying bad faith practices to different loan markets.
 
That's nowhere close to my point, though, but sure. I understand the limitations of the argument. But consider the following.

If you're going to prosecute anybody who gave a bad mortgage or gave a mortgage in bad faith, then you're talking about a very large chunk, if not the overwhelming majority of the industry. That's impossible. I feel like it's safe to assume, too, that most of these people implicated in bad mortgages were not acting with malicious intent. Some of them are, but for the most part, it's a bunch of low-level lackeys relatively close to the bottom of a massive corporate hierarchy, enacting policies that come down from the top.

That being said, there are a handful of actors who are likely directly responsible for the foreclosure crisis, from the regulatory agencies that have proven to be lax at best and criminally negligent at worst (Thanks, Clinton and Bush II!), to management and executive staff who actually implemented a lot of these policies (Satan already has a suite prepared for Jamie Dimon), likely knowing full well what the consequences of their decisions would be. For instance, I guarantee you that mortgage lenders and servicers knew to expect a significant amount of default and built in the possibility of repossession and resale into whatever their projected gains would be...

It's really easy to sit behind a keyboard and say that several thousand people need to go to jail for decades, but it's much harder to actually build cases against the people who deserve to...

My other issue with the way that folks talk about this problem is that this a very bad case to screw up. Default is already a really serious issue and it's getting worse. The same companies that profited off of subprime mortgage default will profit off of student and payday loan default.

Setting bad precedent by failing to assign accountability where its due is arguably just as damaging as the crisis itself, and the left saying that everybody involved should be tarred and feathered - at the expense of actually leaning on its leadership to prosecute the people responsible (wasn't Obama supposed to do that for us?) - is hot air that gets us nowhere to actually doing something about the problem.

Agree with all this. Just wanted to clamp down the "following orders" rhetoric. Though you made the right point; orders need to change.
 
On the lower end of the lender totem pole, I think there is a case to be made for aiding and abetting. If a borrower is taking out a liar loan, and the broker knows he's a liar but goes along because there's a nice fee in it for him, how is that not aiding and abetting fraud? The story of Charlie Engle is pretty instructive and I don't think he was a rare case. http://www.outsideonline.com/outdoor-adventure/running/The-Road-Goes-On-Forever.html He just got busted because some IRS agent got a hard on for him for some unknown reason.

Brokers are the ones who get these loans and correspond with the lenders. You need a paper trail to show who lied.
 
I guess I just don't understand the need to pin this on individuals on the lower end of the totem pole, while the upper half of decision makers will undoubtedly get off clean and the industry itself is simply reapplying bad faith practices to different loan markets.

I don't really disagree with that at all. I was just responding to bmoney's post about how "it's not illegal to make ARM loans to people with bad credit." It's not, but it is illegal to knowingly participate in bank fraud. I also made the post to counteract the more general narrative about how it's all the borrower's fault, like there was no one else participating in these liar loans and they just got originated and underwritten by robots or fairies or something.
 
Sorry, feel like we are talking past each other. I was referring more to the vast majority of the big bank employees who worked in their mortgage departments. I don't think it would be possible to charge any of them because they weren't close enough to the fraud on the front end (lies at origination) or the back end (misrepresenting to institutional investors).

Tons of those brokers are obviously scum and it wouldn't break my heart to see a little pain inflicted on them.
 
I think there was less outright fraud than many on here are assuming. Just people being greedy and stupid. Outside of Goldman and a few hedge funds, not many actually made money out of the crisis or hacing mortgages / securities defaulting. The various players just didn't think about the down the line consequences of their actions.
 
That was a really good article. Confirmed all my biases and preyed on all my fears too. Anybody know any good counter arguments? I guess there's not a lot of good journalism about how dumb consumers were.
 
That was a really good article. Confirmed all my biases and preyed on all my fears too. Anybody know any good counter arguments? I guess there's not a lot of good journalism about how dumb consumers were.

I worked in foreclosure prevention for two years - the law office did some full scale representation when the situation called for it, but we mainly did HAMP applications for people who hadn't yet lost their homes, but were definitely underwater. There are a lot of dumb consumers (a majority of the people that came to our office and clinics, I would say), but whether it's my bleeding heart or the obvious pattern in terms of stories and experiences, I really can't think of a reasonable counter argument to that article. I think the extent to which you blame consumers really falls along the lines of how blind you are to your financial socialization and how that socialization is tied into generations of access to mainstream financial services.
 
Just pour another drink for yourself and try to enjoy the life the bankers let you have.
 
Read this Economist article. http://www.economist.com/news/leaders/21614138-companies-must-be-punished-when-they-do-wrong-legal-system-has-become-extortion.

This is the flip side of these corporate prosecutions leading to huge settlements, with no actual people punished for their actual conduct. It undermines the rule of law, damages shareholders, not culpable executives, and does little to set valuable legal precedent or warn other businesses what acts will be pursued. The article also highlights the problem with regulatory complexity rising to the point that prosecution becomes discretionary and depends on whether the prosecutors think they can score a "record" settlement.

The whole thing is rotten to the core.
 
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